3rd ICAI 2024

International Conference on Automotive Industry 2024

Mladá Boleslav, Czech Republic

manufacturer at a certain price and subsequently determined the margin and other price-related considerations eventually projected into the final price. The overall market conditions in which a final consumer selected and a dealer offered sale and purchase conditions have thus been affected by not only inter-brand competition among dealers (and manufacturers) of different car brands, but equally importantly also intra-brand competition among the dealers of the same car brand. In other words, the final consumer has so far been able to choose among different car brands, models and specifications (inter-brand competition) as well as among competing offers for a particular car model and specification (intra-brand competition). On the other hand, the prospective agency model envisages the transition of independent dealers to the manufacturer’s agents who no longer independently determine sale conditions (in competition with each other) but primarily broker the sale between the manufacturer and the final consumer. In the agency model, the price paid by the final consumer is set by the car manufacturer itself (rather than the dealer), and the dealer’s margin is determined based on a separate arrangement with the car manufacturer. There are several reasons which underpin the car manufacturers’ inclination towards moving to the agency model. First, the model may allow car manufactures to enjoy broader control over the final price and thus to adapt more quickly and flexibly to competition. Second, the model may enable car manufacturers to make effective use of new sales channels (such as the internet), and may also facilitate the adoption of a broader portfolio of services that also integrate maintenance and repair services (for the competition law aspects of the integrated subscription model introduced by Volvo in 2017, see Bostoen, Devroe, 2018). One may argue that the agency model may significantly decrease the level of intra brand competition, as the car manufacturer would generally possess increased control over the price to the final consumer across its dealers (agents). Final consumers thus may no longer be able to benefit from intra-brand competition with respect to a particular car brand, as the final pricing conditions may be uniform (and transparent) across all the car manufacture’s distribution channels. The purpose of this paper is to address the competition law aspects of the intended transition from a dealership model to an agency model. Section 2 sets the floor by discussing the current competition law regulation in the car distribution sector. Section 3 then considers the potential (partial or full) elimination of intra-brand competition, the related aspects of setting contractual relations to comply with competition rules and the related effects of agency model on competition. Section 4 then briefly concludes by. 2. Current Antitrust Regulation of Car Distribution In the EU, Art. 101(1) of Treaty on the Functioning of the European Union (OJ C 326, 26.10.2012, p. 47) (the “ TFEU ”) generally prohibits all agreements between undertakings which have as their object or effect the prevention, restriction, or distortion of competition. Pursuant to Art. 101(3) TFEU, restrictive agreements might be declared lawful in case they contribute to improving the production or distribution

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